ACCT 434 MIDTERM EXAM

ACCT
434 MIDTERM EXAM

1. (TCO 1) Which of the following is a sign
that an ABC system may be useful?

2. (TCO 1) Merriamn Company provides the following ABC costing
information:…………How much of the account billing cost will be assigned to
Department B?

3. (TCO 2) Budgeting provides all of the following EXCEPT

4. (TCO 2) White planned to use $82 of material per unit but
actually used $80 of material per unit, and planned to make 1,200 units but
actually made 1,000 units. The flexible-budget variance is

5. (TCO 3) The conference method estimates cost functions

6. (TCO 4) In evaluating different alternatives, it is useful
to concentrate on

7. (TCO 5) Producing more nonbottleneck output

8. (TCO 5) Schmidt Corporation produces a part that is used in
the manufacture of one of its products. The costs associated with the
production of 10,000 units of this part are as follows. Phil Company has
offered to sell 10,000 units of the same part to Schmidt Corporation for $18
per unit. Assuming there is no other use for the facilities, Schmidt should

9. (TCO 3) The cost components of an air conditioner include
$35 for the compressor, $11.50 for the sheet-molded compound frame, and $80 per
unit for assembly. The factory machines and tools cost is $55,000. The company expects
to produce 1,500 air conditioners in the coming year. What cost function best
represents these costs?

1.(TCO 1) For each of the following activities, identify an
appropriate activity-cost driver. a. machine maintenance b. machine setup c.
quality control d. material ordering e. production scheduling f. warehouse
expense g. engineering design

2. (TCO 2) Lubriderm Corporation has the following budgeted
sales for the next six-month period.There were 30,000 units of finished goods in inventory at
the beginning of June. Plans are to have an inventory of finished
products that equal 20% of the unit sales for the next month.
Five pounds of materials are
required for each unit produced. Each pound of material costs $8.
Inventory levels for materials are equal to 30% of the needs for the next
month. Materials inventory on June 1 was 15,000 pounds.
Prepare
a purchases budget in pounds for July, August, and September, and give total
purchases in both pounds and dollars for each month.

3. (TCO 3) As part of his job as cost analyst, Max Thompson
collected the following information concerning the operations of the Machining
Department. Use the high-low method to determine the estimating cost function
with machine-hours as the cost driver.

4. (TCO 5) Collier Bicycles has been manufacturing its own
wheels for its bikes. The company is operating at 100% capacity, and variable
manufacturing overhead is charged to production at the rate of 30% of direct
labor cost. The direct materials and direct labor cost per unit to make the
wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels
per year……? Justify your answer.

5. (TCO 1) For each of the following activities, identify an
appropriate activity-cost driver. a. machine maintenance b. machine setup c.
quality control d. material ordering e. production scheduling f. warehouse
expense g. engineering design

6. (TCO 2) Lubriderm Corporation has the following budgeted
sales for the next six-month period ……Prepare a purchases budget in pounds for
July, August, and September, and give total purchases in both pounds and
dollars for each month.

7. (TCO 3) As part of his job as cost analyst, Max Thompson
collected the following information concerning the operations of the Machining
Department: Observation Machine-hours Total Operating Costs January 4,000
$45,000 February 4,600 49,500 March 3,800 45,750 April 4,400 48,000 May 4,500
49,800 Use the high-low method to determine the estimating cost function with
machine-hours as the cost driver.

8. (TCO 5) Collier Bicycles has been manufacturing its own
wheels for its bikes. The company is operating at 100% capacity, and variable
manufacturing overhead is charged to production at the rate of 30% of direct
labor cost. The direct materials and direct labor cost per unit to make the
wheels are $1.50 and $1.80, respectively. Normal production is 200,000 wheels
per year. A supplier offers to make the wheels at a price of $4 each. If the
bicycle company accepts this offer……

9. (TCO 4) Sunk costs Answer; Are past costs.